Sam Cook made no reference to Social Security in his classic song “A Change Is Gonna Come.” However, the sentiment certainly seems to apply to the federal program.
The reality is that Social Security cannot stay the same without hefty benefits. But Congress is unlikely to face the wrath of seniors if they let that scenario happen.
What specific changes to Social Security can be made? The smart money would be on the ideas that have the most support among both Democrats and Republicans.
In June, the University of Maryland’s public consultation program released the results of a survey that identified the most popular steps to avoid a Social Security deficit. Here are five likely changes to the program over the next 10 years based on the survey’s findings.
1. Increase the salary ceiling for payroll tax
Both Democrats and Republicans in the University of Maryland survey were particularly fond of one idea to solve Social Security. An overwhelming majority — 81% — of survey respondents supported an increase in the salary cap for the payroll tax that funds Social Security. The proposed change was favored by 88% of Democrats and 79% of Republicans.
Currently, only wages up to $147,000 per year are subject to payroll taxes. The proposal in the study is to make all wages over $400,000 a year taxable as well. This would eliminate about 61% of the expected social security deficit.
Whether or not lawmakers will eventually go with the $400,000 threshold remains to be seen. However, with this idea gaining significant bipartisan support from the American public and making a big difference in strengthening Social Security, it seems close to a slam-dunk change at some point in the not-too-distant future.
2. Reduce benefits for high earners
Richer Americans may have another hit up their sleeve. Eighty-one percent of respondents thought it was a good idea to reduce benefits for high earners. Democrats were more in favor of the alternative, with 86% support, compared to 78% of Republicans.
Who would be considered a high earner under this plan? The question of the survey asked about lowering benefits for the top 20% of earners. If implemented, this plan would eliminate nearly 11% of the projected Social Security deficit.
3. Raise Retirement Age
Democrats and Republicans are almost equally supportive of raising the retirement age. Seventy-six percent of Republicans favor the plan, while 76% of Democrats like it.
This is of course not a new idea. In 1983 the full retirement age was raised from 65 to 67. The change was phased in, with a higher age for everyone born in 1960 and later.
The University of Maryland research suggested raising the retirement age by one year to 68 years. This change would wipe out 14% of the projected Social Security deficit.
4. Increase payroll tax
Seventy-three percent of the respondents were in favor of an increase in the payroll tax. Democrats liked the idea slightly more than Republicans, with 78% and 70% support from the two groups, respectively.
However, we are not talking about a huge increase. The proposal in the study was to increase the payroll tax from 6.2% to 6.5%. However, that relatively modest change would have a significant impact. It would make up about 16% of the projected Social Security deficit.
5. Increase the minimum benefit
Not all of the most popular Social Security changes will help bolster Social Security. Sixty-four percent of the survey respondents were in favor of increasing the minimum benefit. Democrats were more supportive of the idea, with 71% supporting it, versus just 59% of Republicans.
The University of Maryland research suggested increasing the minimum monthly Social Security benefit from $951 to $1,341 for anyone who has worked for 30 years. While this change received broad support, the projected Social Security deficit would increase by 7%.
The $18,984 Social Security Bonus Most Retirees Completely Overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can give your retirement income a boost. For example, one simple trick could save you as much as $18,984…a year! Once you know how to maximize your Social Security benefits, we think you can retire confidently with the peace of mind we all strive for. Click here to learn how to learn more about these strategies.
The Motley Fool has a disclosure policy.